In the realm of copyright, recorded music is especially unique. Unlike other creative works, there are two copyrights in every piece of recorded music: one is in the underlying composition and the other is in the recording of the composition itself. The former copyright is usually owned by music publishers and songwriters, while record labels are the normal owners of the latter copyright. Publishers will typically issue what are known as mechanical licenses to parties (such as Spotify) for use of the composition and receive mechanical royalties for themselves and the composer in return.
On this topic, Spotify recently settled with a group of songwriters over copyright infringement claims. The lawsuit, which combined separate filings by musicians David Lowry and Melissa Ferrick, claimed that Spotify had been knowingly distributing copyrighted compositions without obtaining the proper mechanical licenses.
In Lowry’s initial complaint, it was alleged that Spotify had unlawfully distributed copyrighted music compositions to more than 75 million users, but failed to identify or locate the owners of those compositions for payment. Instead of tracking down the publishers’ information, it was alleged Spotify went ahead and streamed the compositions anyway. As a result, it is alleged that publishers and the composers went unpaid and lost out on mechanical royalties owed for the use of their copyright in the composition.
To amend this situation, the settlement agreement proposes that Spotify will set up a fund worth $43.4 million to compensate the songwriters and publishers whose compositions were used without paying mechanical royalties. Further measures include the creation of an outside body to help identify similarly unmatched tracks and setting up an auditing system for songwriters to verify the accuracy of royalty payments. As Spotify’s subscriber base continues to rise, this is a major boost for publishers and songwriters in the battle to be properly compensated for their copyrights.